FAMILY’S REAL ESTATE DEALINGS UNDER STATE, FEDERAL SCRUTINY
and philosophical, an engaging contrast to Jared Kushner’s more stilted persona. He made little effort to hide his contempt for the investigations of his business and family, saying that the stacks of records he has voluntarily given investigators rebut any suggestion of impropriety.
“Go knock yourselves out for the next 10 years,” he said. “We didn’t do anything wrong.”
A long list of investigators are testing that claim. Federal prosecutors in Brooklyn are studying whether one of Kushner’s daughters dangled White House influence before prospective Chinese investors. So is the Securities and Exchange Commission. The Brooklyn federal prosecutors also are investigating the terms on which Deutsche Bank, Germany’s largest lender, refinanced a Kushner-owned property in Times Square.
State regulators in New York are examining Kushner loans from that bank and two others, including lines of credit to Jared Kushner. Jared Kushner’s White House meetings with lenders and partners of Kushner Cos. have raised repeated questions about conflicts between his official and personal interests.
Most recently, the head of the federal Office of Government Ethics informed a House member in a letter that he had asked the White House counsel to examine meetings in the White House last year between Jared Kushner and officials from two financial companies. The companies later lent Kushner Cos. more than a half-billion dollars.
The meetings were reported earlier by The New York Times; the letter was reported by CNN. Sarah Huckabee Sanders, the White House press secretary, said Tuesday that the counsel’s office was not investigating whether Kushner broke the law. Charles Kushner described the loans as arm’s-length transactions that did not involve his son.
On top of all of this, the political prize at the root of those travails — Jared Kushner’s White House post — appears to be losing its luster. Although he remains Trump’s senior adviser, Jared Kushner, 37, was stripped of his top-secret security clearance in February for reasons that remain undisclosed. Kushner, who friends say was taken aback by the decision, has avoided questions about how he will fulfill his once-sweeping White House duties without that privilege.
He has also lost some of his closest allies: two aides, Reed Cordish and Josh Raffel, recently announced their exits, as did Gary D. Cohn, the president’s economic adviser. Still hoping to make an impact on global affairs, Kushner has turned his attention from the Middle East stalemate to U.S. relations with Mexico.
Friction in the family
Charles Kushner is adamant that his family remains united in the face of their difficulties. But friends say Jared Kushner’s sister is distressed by investigators’ focus on her, and there are tensions between Jared and Josh over Trump. That Josh Kushner, 32, has made no secret of the fact that he did not vote for Trump upset his brother, several friends said. Voting records show Josh Kushner did not vote in the 2016 presidential election. Josh’s spokesman, Jesse Derris, said the brothers “are just as close as ever.”
Tales of his distaste for the administration continue to surface, most recently at a January party at Oscar, a health insurance firm that he helped found. According to one attendee, Josh Kushner listed the year’s challenges, concluding with a laugh: “We survived Donald Trump. Don’t tweet that. Really, don’t tweet that. I’ll get in so much trouble.”
The Kushners have weathered ordeals before and emerged stronger and more prosperous. In 2004, Charles Kushner pleaded guilty to 18 counts of witness retaliation, tax violations and false statements to the Federal Election Commission after he hired a prostitute in a scheme to entrap and retaliate against his brother-in-law, who he suspected was cooperating with a federal inquiry into his business.
Charles Kushner still does not speak to his brother, whom he publicly blamed for instigating the investigation that led to his two-year prison sentence. Asked whether he hoped for presidential absolution, Kushner said, “I would prefer not to have a pardon” because it would trigger only further publicity.
His real estate empire is now under a national microscope, its every deal scrutinized for hints of federal influence.
While Charles Kushner insists his bankers are loyal, investors are eager and deals are plentiful, some business associates say the drumbeat of unflattering headlines is putting tremendous pressure on the family business. Banks must assess the risk of any continuing regulatory or criminal inquiries before making loans; potential investors are worried that they could come under scrutiny or that projects will be delayed or fall apart.
Kushner scoffs at such fears. “We are actively involved in more than $3 billion of projects and banks are providing $1.5 billion of financing in the first six months of this year,” he said. “Does that seem like we are lacking in funds?”
That said, the company has been forced to rule out two major sources of financing — foreign nations’ sovereign wealth funds and a federal program that offers foreign investors a path to citizenship — after questions about the propriety of tapping them given Jared Kushner’s foreign policy influence. While Kushner transferred some holdings in Kushner Cos. to a trust run by his mother, he retains the vast majority — holdings estimated to be worth at least $761 million.
Avoiding such entanglements has proved harder, company officials said, than they expected. Bloomberg recently reported that two months after Kushner joined the White House, the firm sold a stake in a Brooklyn building to an entity whose largest shareholder is the Japanese government. A spokesman said Kushner company officials were unaware of the Japanese government’s involvement until the news report.
The finance minister of the tiny, oil-rich Gulf nation of Qatar also met separately early last year with both Josh and Charles Kushner at a time when the Qataris were seeking White House support against their powerful regional rivals. Josh Kushner, who runs the investment firm Thrive Capital, which recently raised a $700 million fund, cleared the meeting with outside counsel beforehand, his spokesman said.
“Josh met with the minister for less than 30 minutes,” Derris said. “There has been no contact since that time.”
The elder Kushner said he made clear to the minister that he had no interest in government-sponsored investment, and like his son, has had no further contact with him.
Projects in jeopardy
The family’s costliest and most ambitious real estate project — a $7.5 billion plan to raze their 41-story Fifth Avenue office tower and replace it with a new architecturally dazzling one, twice as high — was an early casualty of the family’s White House connection. A financing pact with a Chinese firm connected to some of the Communist Party’s leading families collapsed in the face of public scrutiny.
Now the Kushners are scrambling. They have only 10 months before a $1.2 billion mortgage comes due to find a profitable use for a 61-year-old office tower with dark corridors, low ceilings and too few tenants to cover the interest on the purchase loan.
By some estimates, the skyscraper is now worth about one-quarter less than the then-record price of $1.8 billion they paid for it in 2007. Vornado Realty Trust, which also took a 49.5 percent share in the office space, wants out. The shortfall this year between the income it generates and the interest on the loan exceeds $30 million, split evenly with the Kushners. Charles Kushner says he is willing to buy out his partner, but some business associates say that would only double an already money-losing real estate bet.
Company officials have sought to minimize the effect of the tower’s financial troubles, saying it is one property among many and they marked down its value so it is less than 4 percent of Kushner’s net worth, estimated at $2.5 billion.
Debt for the Kushners’ portion of the Times Square property at 229 West 43rd St. is also on a watch list, according to Trepp, a firm that analyzes mortgage-backed securities. But both Kushner and Laurent Morali, the firm’s president, call that building, the former headquarters of The New York Times, an excellent investment. They insisted that the 2016 loan from Deutsche Bank, which is now under scrutiny by federal prosecutors in Brooklyn, was an arm’s-length business transaction.
Financing for a third $800 million project, two towers across the Hudson River in New Jersey, has been delayed by yet more questions arising from the family’s White House ties. The company had hoped to attract $150 million from foreign investors via a federal visa program, EB-5, that offers green cards and eligibility for permanent residence to those who invest at least $500,000 in a U.S. business.
In a marketing event last May in Beijing, Charles Kushner’s daughter Nicole Kushner Meyer, 34, a comparative neophyte in the family business, told potential investors that the project meant a lot to “my entire family.” She added that her brother had left the firm to work in the Trump administration.
They apologized and abandoned the program — to avoid unwanted attention, Kushner said. “My daughter, our company, did nothing wrong,” he said.
Prosecutors and SEC regulators have sought documents from the Kushners and their business partner, KABR Group, apparently in part to determine if potential investors were misled about their visa prospects. Kushner has hired a criminal defense lawyer for Nicole, adding to his family’s roster of legal defenders.
Some in the Kushner camp are hopeful that particular inquiry is fading. But yet another one began two weeks ago after The Associated Press reported that the Kushner Cos. had secured more than 80 construction permits after falsely declaring it had no rent-regulated tenants.
The company said it had outsourced the applications to a third party, and added that it had corrected the errors. But the New York City Buildings Department said it was investigating whether city laws were broken.